My colleagues in our Corporate & Commercial team are frequently advising clients how to restructure their businesses – not just to survive COVID-19 – but also to also ring fence any assets they may feel belong outside of the family circle, writes Louise Barretto, Head of our Family law team.
There are many ways to restructure a business and ensure your business is protected in the event that you subsequently separate from a spouse or partner.
Ensuring that the tax liabilities of a couple working together in a business can be efficiently divided occasionally overlooks the fact that if a business owner transfers any shares or proceeds of the business they may have owned prior to the marriage to their partner during a marriage the court may regard them as matrimonial assets. There may also be further implications on future maintenance claims depending on how the business owners choose to take their earnings. So, for example a large payment into a pension on behalf of the business owner may be excluded from the calculation of maintenance for the children.
Your partner may not even be directly employed or running the business to be entitled to a share of it on your separation.
However, an inheritance gifted to you alone, for example the business of a parent may not be considered matrimonial property so long as you own it in the same way it was gifted to you. In that respect it may be ringfenced.
In my next blog I will discuss in more detail the evergreen case of White v White and the intriguing circumstances in which these precedents were set.
The above is accurate as at 24 November 2020. The information above may be subject to change during these ever-changing times.